The Hindu Business Line : Debt will be evergreen

YOU just can't overlook Sahara Mutual Fund even if you want to, indicates Mr Rajiv Shastri, CEO, while referring to what he says are the MF's obvious strength - a strong backer in Sahara India group with an increasing reach into the retail heartland.

Here are the excerpts from his interview to Business Line.

Investors are ignoring fixed income to their disadvantage. Do you agree?

It is true that money will flow into the most attractive asset classes. Equities have given superlative returns in recent times, a trend that has turned a large number of investors, including many first-timers, towards stocks. However, it is also being noticed that their asset allocation is exceptionally - perhaps, dangerously - biased towards equities.

Given the ebullient state of the stock market, this may not be perceived to be unsafe at this stage. However, investors must take care to ensure that their allocation strategies do not go wrong if and when the scenario changes abruptly. As to when that may happen is anybody's guess, but the wise investor should stay prepared.

What may spoil the party for Indian equities?

Well, it may be a combination of several reasons or the sudden emergence of a major negative factor.

Fund managers everywhere keep a close vigil on factors like international commodity prices and geo-political issues. These will be important for India too. Interest rates, always a critical aspect of the economy, also need to be watched carefully.

Corporate earnings growth has been a major plus for India so far. A situation marked by a tapering of earnings can modify the current trend, at least for some time.

How do you react to the view that the Sahara group parks much of its own money in your funds?

Clearly, this is a perception that should be demolished. Investors, institutional or otherwise, will choose our funds on the basis of merit. If they find enough value in placing resources in our care, their decision will be based on reasoning and not on any other consideration.

For investment purposes, the group sees us like any other fund house and selects our products if such selection makes sense. Having said this, let me add that Sahara's expertise in para-banking is well known. And Sahara India Financial Corporation happens to be the flagship investment arm of the group.

Will variable fees be a regular feature in your forthcoming products?

Yes. We plan to offer this every time we come out with a fund. The idea is to provide investors with an option which we feel will be important for them. We hope this will find support from the rest of the asset management industry as well as from intermediaries.

Any new funds in the pipeline?

We have mooted a dividend yield fund, for which an offer document has been sent to SEBI for clearance. Dividend yield, according to us, is a compelling model that investors need to appreciate fully. Some sections are of the view that it is more relevant in bearish phases. This is clearly not the case. A few funds based on this concept already exist in the market.

It seems the MF industry is not keen on doing debt products any longer. Your comments.

Remember, not long ago, investors did see debt products provide double-digit returns. In one way or other, debt will be evergreen.

Let's wait till it becomes more important again. As I said before, equity is now a far more attractive proposition.